BI to hand down forex monitoring ruling next month

JAKARTA (JP): Bank Indonesia deputy governor Achjar Iljas said on Monday a new central bank regulation setting the minimum amount of foreign exchange transfer to or from the country that is subject to compulsory reporting would be issued next month at the latest.

"It will be completed in one or two months. We're still seriously discussing it, because we don't want it to have to be revised soon after its issuance," he said on the sidelines of a hearing with House Commission VIII for the state budget and finance.

Achjar explained that deciding on the minimum amount of forex transfer that required reporting was a challenge.

"If the minimum amount is set too low it would be cumbersome, but it is set too high many transactions would evade the compulsory reporting," he said.

He said because the reporting system would initially be paper- based, if the minimum amount was set too low the paperwork would be phenomenal.

Achjar said the important thing was to design a reporting system in such a way that statistics resulting from the reporting would be useful for monitoring the forex flow.

Asked if the central bank would set the minimum amount at US$10,000, as is the case in the U.S., he said: "That amount is too high for our economy."

The House of Representatives passed a bill in April that empowers Bank Indonesia to monitor the flow of forex, by requiring all transfers of capital in and out of the country to be reported.

The law on the forex flow stipulates that every person or legal entity within the country is required to inform banks or other parties appointed by Bank Indonesia about the transfer or flow of a certain amount of foreign currency or rupiah to or from the country.

The minimum transfer amount that requires reporting would be set under a central bank regulation.

The monitoring system is deemed necessary as a preventive measure to help avoid a currency crisis, such as the one that hit the country in August 1997.

Achjar said in addition to a forex monitoring ruling, the central bank would also soon introduce 12 new regulations, including a ruling on the obligation to use rupiah currency in certain transactions.

He said the central bank had so far issued two new rulings this year, including a ruling on the maximum amount of Bank Indonesia liquidity support to troubled banks, based on its role as the lender of the last resort as stipulated by the new central bank law.

Another Bank Indonesia official, who requested anonymity, said that in addition to the forex transfer amount, the compulsory reporting should also mention the type of foreign currency, the purpose of the transfer and the source of the revenue, names of receiving and sending parties, and the countries of origin and destination of the money.

"These requirements are aimed at curbing money laundering," the source said.(rei)